Sunday, November 28, 2010

Credit Card Debt...

The Federal Government is not the only thing in this country drowning in debt. So many people living in this country are trying to keep their heads above water because of credit cards. The only difference is that the Federal Government has no one to answer to as they rack up debt. They continue their wasteful spending practices and then just tax us more and expect us to stretch a dollar further than it will go. It makes me sick to think that some families have to decide between paying the electric bill or putting food on the table, while the Federal Government sends its employees for training and then puts them up in hotel suites for two weeks, instead of a regular room!

Credit cards are responsible for many people’s debts and some bankruptcies. They encourage people to live beyond their means. I’ll buy what I want now and pay for it, over time, at very high interest rates. One extravagant purchase turns into two or three or more. It gets easier every time you use it. Then you pay the minimum amount, so you are paying for your item three and four times over. The system is making huge profits for the credit cards companies, who not only collect interest from consumers every month, but fees from the stores who accept them.

At one time, when I first got my cards, you needed a job with a decent salary before you would be approved for a credit card. Not so today. Today, they are offered to college students with no jobs at all. I know because I got one for each of my daughters when they entered college, to be used for emergency purposes. These cards were strictly their own and not attached to me in any way whatsoever. Even without jobs they started with $500 to $700 in credit. Of course we paid the cards off every month for them, but the purchases were for books, school supplies and things that they got permission from us first, before charging. We wanted them to start establishing their own credit while still in college, as well as have the peace of mind of knowing they had “money” if they needed it.

Many parents and college students are not so responsible. Parents do not monitor their children’s credit cards and many students apply for several cards. Since they do not need a parent’s approval, they can accumulate a lot of debt in a short amount of time at high interest rates. Many students use the cards for frivolous items or pizza parties. The credit card companies are counting on that. They get to these kids early and then they own them for life.

When I was growing up, my parents did not believe in debt. If you wanted something and didn’t have the money, you waited till you did and paid cash. They never had a loan of any kind. So, when I got my first credit card, I made sure I paid it off in full every month and never paid a dime in interest. Even when I had several cards, because some stores only accepted their own, I always paid the balance off every month. I didn’t make it a habit of using them all the time and, as is our practice today, we use them for the convenience of not having to carry around a lot of cash. My children were raised the way I was raised. They do not like debt. Now that my older daughter is working, she considers her purchases carefully. Before she uses her credit card, she makes sure she has the money to pay for the bill when it comes. She has learned the value of saving money and staying debt free.

Of course many parents today are not able to teach their children these values because they themselves are up to their eyeballs in debt. But, there are ways to get out of debt and stay out of it. It would be a good lesson for children to learn about how easy it is to get into debt and how difficult it is to become debt free. They should also be aware that their credit rating is going to determine their ability to get loans for cars, mortgages and eventually loans for their own children’s education.

Maybe if the Federal Government set a good example, the value of being debt free would trickle down to it’s citizens? Maybe if parents would teach their children a few simple lessons about money early in life, they would grow up to be debt free?

So many people have grown up with debt and lived in debt, they actually don’t know what it means not to owe anything to anyone.